Let’s talk about decision-making. In my hometown, Delft (The Netherlands), a beautiful new railway station has just opened (station hall and municipal offices are located above a new underground train station). Designed by the renowned architects of Mecanoo, it may be arguably one of the most beautiful train stations in the world. It has, for example, a stunning ceiling of curved white horizontal strips enriched with a historic city map of Delft. So far so good?
Yes and no. It is a new fantastic landmark for Delft, but at the same time, it has brought the city close to bankruptcy. The budget has been exceeded by hundreds of millions of euros. The total costs grew to roughly one billion euros. Is the decision to build this station a good one? Probably not. The citizens of Delft will pay dearly for it for the coming decade. In retrospect, it seems that the municipality failed to collect the proper data and failed to calculate the risks extensively. You could even say that the decision about the railway station was flawed because of a too strong desire to end the old situation a railway viaduct dividing the inner city of Delft.
Well, that is decision-making in a nutshell. If we want something, we tend to minimize its risks and exaggerate its benefits. We are simply not very good at decision-making. According to Dan Gilbert (you can watch his TED talk), we make bad decisions because “of people’s inability to estimate odds and inability to estimate value.”
Just google “bad business decisions” and you’ll be rewarded with tons of them. I’ll give you a few examples. In 1962 the Beatles auditioned at the London office of Decca Records. The executive in charge of talent rejected them because he didn’t like their sound and argued “Groups are out; particularly four-piece groups with guitars.” (source: Forbes). Good decision? You know the answer: The Beatles have sold 2.3 billion albums ever since (source: Statistic Brain).
Remember Gilbert: “We are not good in estimating value“. Here’s another one. In 1977, 20th Century Fox made an astonishingly short-sighted decision. They signed overall product merchandising rights for any and all Star Wars films to George Lucas in exchange for a mere $20,000 cut in Lucas’ studio paycheck (source: Forbes). The combined revenue from merchandising is estimated to have exceeded three billion dollars.
Last one. Do you have any idea what are the cost of hiring the wrong person? Share your comments with us, or if you have Twitter, tweet me your best guess and I’ll tell you the exact number. Could we do better? Well if you ask Gilbert – probably not. In the mind map/infographic depicted weak spots in our decision making are depicted: evaluating risks, collecting data, and testing decisions. Next time you make a decision, keep this mind map in mind.
About the author
Hans Buskes is a business consultant, marketing communications manager, and mind mapper. He’s the author of several mind map books and mind map blogger on Mastermindmaps.